reports
- Chris Hoare
Chinese Telcos Q3 24 review: Macro continues to impact the top line
Service revenue trend kept steady relative to Q2, albeit being slower than before due to macro headwinds. Yet earnings momentum continued to trend in the mid-single digits overall as we saw good cost control by China Telecom again (acceleration in EBITDA) while peers were cushioned by lower D&A costs (back by easing capex).
- Chris Hoare
Indian Mobile VIL – Nationalisation beckons, and implications for Bha...
With the company unlikely to have been able to engineer a meaningful recovery by the end of the moratorium on payments to the govt, and the stock trading below the level at which it can issue new shares, we see the most likely outcome now as creeping nationalisation. Bad for VIL, but great for Bharti and Jio. We discuss implications for Indus in a separate note out today.
- Chris Hoare
- Chris Hoare
Chinese Telcos Q2 24 review: Strong earnings despite softer topline; ...
Despite the slowdown in service revenue trend from softer macro, Chinese operators still delivered a strong earnings growth. Interim dividends rose by 7-22% YoY as all three raised payout ratios. Despite the share prices already roughly doubling, we remain bullish on exposure to China’s structural enterprise theme, improving capital intensity and improved shareholder remuneration.
- Chris Hoare
Indian Telcos Q1 FY25 review: Slower mobile with modest rise in margi...
Indian mobile revenue rose steadily despite slowing this quarter due to softer ARPU trend. Both Bharti and Jio continue to take share from Vodafone Idea again. Mobile EBITDA kept ahead of topline with all three seeing YoY improvements in margin. Overall, Bharti remained ahead on both metrics.
- Chris Hoare
Bharti Airtel (Neutral, TP: INR 1,500, +3%) Bharti Global to acquire ...
Bharti Enterprise's investment arm, Bharti Global, has sought to acquire 24.5% stake in BT from Altice UK. Although Bharti Airtel is separately owned by Bharti Enterprise (through Bharti Telecom), we share our thoughts on why we perceive this to be a likely overhang on Bharti Airtel.
- Chris Hoare
Indian Mobile Bharti follows Jio with price hikes, but perhaps not as...
Bharti has immediately followed Jio's price hike announcement, with an announcement that it is set to raise its mobile prices by between 10% and 21%. We calculate the average increase is slightly lower than Jio. The change would be effective from 3rd July too which means the full impact of the tariff hike would only be felt from Q3 FY25.
- Chris Hoare
Indian Mobile Price hikes priced in?
Jio leads India's first mobile hike since December 2021; we expect peers to follow. The announcement was made after the conclusion of the spectrum auction where Jio only participated modestly. This is thus structurally positive. However, that both Bharti and VIL are trading down on this news is indicative of how much good news is already priced into Indian mobile. Our thoughts below.
- Chris Hoare
Indian Mobile India's auction concludes - Our final thoughts
India's spectrum auction concluded yesterday with 141.4 MHz of airwaves being sold across the 900 MHz, 1800 MHz, 2100 MHz and 2500 MHz band for INR 113 bn (US$ 1.36bn). Our proprietary spectrum analytics tool (SpectrumHub) suggests that prices paid were largely in line with the reserve prices, and close to our original expectations.
- Chris Hoare
Indian Mobile Indian Spectrum Auction – Day 1 results confirm modest ...
After further ado, India entered its 10th spectrum auction yesterday with 10,523 MHz of airwaves worth INR 963bn (US$ 11.3 bn), at reserve prices. While Jio has no renewals until 2030, both Bharti and Vodafone Idea have some of their 900 MHz and 1800 MHz band up for renewals this year, in six and two circles respectively. Preliminary analysis suggests that bidding will take on a modest tone unlike in 2022, as validated by Day 1's results, and as we expected. Our thoughts below.
- Chris Hoare
- Chris Hoare
Chinese Telcos Q4 23 review: Outperformance by China Telecom; bullish...
China Telecom was the clear outperformer for service revenue growth this quarter and for the full year too, driven by an acceleration in Enterprise. Industry EBITDA trend was less upbeat in Q4 as China Mobile and Unicom declined. Both capex and dividend guidance were bullish; industry capex expected to lower by 5% while payout is expected to trend above 75% over the next three years (by 2026) for China Mobile and China Telecom.
- Chris Hoare
Indian Mobile VIL Capital Increase – should you participate and what ...
Sometimes the markets behave in ways that appear irrational. VIL having sufficient market cap to launch an INR 200bn ($2.4bn) capital increase despite (in our view) being a failing business is one example. But what does it mean for Bharti, Jio and Indus?
- Chris Hoare
- Chris Hoare
EM Telcos Q2 23: Slightly slower driven by China
EM Telcos top line growth slowed somewhat in Q2 again driven by a slower quarter in China. However, other markets stayed strong and simple average revenue growth was 8.5%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates, as they have been now for 3 years. With the rates cycle seemingly peaking, macro headwinds may also start to improve, and we continue to believe that EM Telcos are still not in our view priced for mid-term GDP+ growth, and rising returns.
- Chris Hoare
Chinese Telcos Q2 23 review: Better EBITDA; Enterprise continue to dr...
Chinese operators slowed to 5% service revenue growth, with the slowdown in mobile and broadband only partially offset by enterprise growth. Importantly, shareholder remuneration were encouraging as interim dividends grew 10%/19%/23% YoY for CM, CT and CU respectively.
- Chris Hoare
EM Telcos Q1 23: Slowdown in India, elsewhere strong
EM Telcos top line growth slowed somewhat in Q1 driven by price increases in India lapping. However, other markets stayed strong and simple average revenue growth was 9%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates.
- Chris Hoare
Chinese Telcos Q1 23 review: Growth sustained by better mobile and co...
Chinese operators sustained another round of 7-8% service revenue growth, supported by improvements in mobile and continued strength in Enterprise. Given the growth in absolute incremental Enterprise revenue, Enterprise service revenue contribution has now exceeded fixed line.
- Chris Hoare
- David Lopes
EM Telcos Validating the Enterprise thesis
In this note we revisit and update our thesis that Enterprise in EM is following an S-Curve. Key new work shows that as a result, absolute incremental Enterprise revenue in China has doubled each year for the past 3 years. This is why overall Telco revenues have sharply accelerated. We show the other countries/ stocks where the early signs are of the same thing happening.
- Chris Hoare
Asian Telcos 5G capex has peaked in Asian Mobile Leaders
We analyse the capex outlook for Asian Mobile Leaders (Japan, Korea, China, Singapore). Conclusions are bullish: Capital intensity has improved materially and this alongside margin stability and better revenue growth completes the positive picture. ROIC, cash flow, and shareholder returns are all upgraded. From a stock perspective, we think China is the canary in the coal mine. Telcos there are surging having been in this environment for 2 years.
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